Source of chart data: FactSet, JPMorgan, 12/31/12. Index definitions can be found at end of post. Past performance does not guarantee future results.Over the past year we?ve highlighted that equities, on many measures, appear to be as cheap to U.S. Treasuries as they have been in decades. Stocks? earnings yield (the inverse of the price-to-earnings ratio) has been substantially higher than the yield on the 10-year U.S. Treasury for the past couple of years.1 The spread is especially high by historical standards, suggesting that stocks may be a much more attractive prospect than Treasuries in the coming years. In recent months, however, stocks have started to appear attractively valued when compared to other sectors of the fixed income market.
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